2011: IKEA employs 127,000 people (Bloomberg, 2011).Financial PerformanceFor the first time in IKEA’s history, financials were revealed in 2010. Total revenues reached arecord high of $31 billion, representing an 8 percent increase from the previous year(Bloomberg, 2011). In 2010, retail operations saw growth in most markets (2.4%), especiallyChina, Russia, and Portugal, with increased sales to €23.1 billion (7.7% from 2009) andprofitability of €2.7 billion (IKEA Group, 2011). Also, higher sales and reduced costs in supplychains led to gross margin improvement from 44.6% to 46.1% since 2009 (IKEA Group, 2011).However, operating costs increased from €7.2 billion to €7.9 billion, mainly due to legal issues inRussia, and the impairment of assets in industrial groups (IKEA Group, 2011). IKEA adjusted
accordingly by reducing expenses by 2.3% (from 2009), with higher currency results alsocompensating for decreased financial net interest income (IKEA Group, 2011). The tax rateincreased from 13.2% to 17.6% mainly due to higher taxable profits (especially in countries withhigher nominal tax rates), with corporate income taxes totaling €577 million, and €150 million inproperty taxes (IKEA Group, 2011). Investments in property (12 new stores and eco-friendlywind farms) and increase in cash and securities led to an increase from €3.7 billion to €41.3billion in total assets, with securities rising from €2.5 billion to €15.2 billion (no credit losses),and total equity amounting to €22.8 billion (IKEA Group, 2011).Co-workers in this area combine a decisive and enterprising approach with thoroughness andstructure. They play an important support role in delivering the IKEA vision and business idea.Finance is in charge of financial requirements and follow-up. They provide information to themanagement teams, ensure fulfillment of legal demands and help secure the long-termdevelopment of IKEA. Business Navigators use their entrepreneurial skills and managementinformation to identify and evaluate business opportunities. Both Finance and Businessnavigation functions span the whole company, and the work is performed in a similar wayregardless of location. As with other work areas within IKEA, co-workers from one part of IKEAcan transfer to another, which allows for many professional and personal developmentopportunities.Problems and opportunityIKEA is one of the most famous furniture brands all over the world. So that IKRA’scompetitors or some small companies always focus on their design or try to imitate their product.How to maintain the property of the latest design of the furniture? I find in China, there are manysmall companies near IKEA Company, and they can produce exactly the same imitation when
the customer need with a lower prize, even than free delivery or set up. It will decrease IKEA’sprofits and have the negative impatient of their reputation. So as for IKEA, at first, they shouldtimely apply the patents for their new products. So they can use laws to protect their intellectualproperty and new product design. Then, when new furniture release, taking more advertise and
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Term
Fall
Professor
JohnMillar
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